What would be some prudent business practice advice that you would like to give to businesses, during the festive season?

As a prudent business practice for a VAT Registered person the following needs to be noted:

l Prices of all goods and services sold or supplied in Fiji should be displayed as inclusive of VAT

l Appropriate tax invoices need to be issued to customers for every sale.

l Non-cash benefits or gifts provided to employees and associates will need to be adjusted for VAT on the VIP values.

Why do you use VAT Inclusive Price (VIP) when calculating the VAT adjustment on the fringe benefit?

The adjustment is based on VIP figures as it is calculated on the total cost of the benefit provided.

The adjustment is necessary as the business would have already claimed input tax in respect of the expense therefore an adjustment is required when the good or service which was purchased for a business purposes is used for an employee benefit instead, which is a private benefit

Some businesses use “Printed Tax Invoice Books” which have VAT Inclusive Price (VIP) stated in total price.  Can a non-VAT Registered person use this?

No, VIP means that the sale is inclusive of VAT hence a non-VAT Registered taxpayer cannot use such invoice books. Please note that only VAT Registered persons can use the term VIP and issue Tax Invoice.

Some taxpayers have limited knowledge of how VAT works and this affects their product pricing.  Some also offer customers lower prices without VAT. What do they need to know?

First and foremost, if any VAT registered trader offers a price without VAT, it should immediately send a signal that the trader is engaging in fraudulent behavior. This should be reported to the Tax Office immediately because this is punishable offense.

For calculation of VAT inclusive prices, the taxpayer needs to correctly calculate product cost, add a markup and then add VAT at the rate of 9% to get product price. (Cost + Mark Up + Vat = Product Price)

What happens if a non- VAT Registered person issues a tax invoice?

This is absolutely an offense under the VAT law whereby the person will be prosecuted for false representation.

On the recipient side, input claims made on these invoices will be disallowed.

If in any case, you are unsure or suspicious, you can verify the VAT registration by calling out Call Center – 3243000/3243253 from 6am to 7pm or email Chief Auditor VAT – Ms. Deepika Kumar – deepika@frca.org.fj